Labor set to clinch mining tax

Phillip Coorey, Ben Cubby

THE Gillard government has shaved $300 million from its $11.1 billion mining tax to win the support of the independents and all but secure the passage of its last unfinished major reform through the House of Representatives.

The Greens were unhappy about a last-minute $100 million concession made to small miners to secure the vote of Andrew Wilkie and were demanding last night that Julia Gillard replace the revenue from elsewhere before they offer their crucial support.

But the legislation is expected to pass the lower house this week, enabling the government to end the year on a high note. The tax is due to start on July 1 and will be put through the Senate early in the new year.

The independents Tony Windsor and Rob Oakeshott gave the tax the green light after the government agreed to measures to penalise states like NSW which lift royalties to gouge mining tax revenue, and better controls on the expansion of the coal seam gas industry, including stricter environmental tests.

''There are certain areas like this place that should always be left alone for agriculture'' … Michael Clift on his property on the Liverpool Plains which is overlapped by coal seam gas exploration licences. Photo: Paul Mathews

Michael Clift, a wheat farmer whose family has tilled the soil of the Liverpool Plains for six generations, welcomed the extra checks and balances on coal seam gas.

''If we don't get this right, future generations will be disgusted with us,'' he said.

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''I feel personally that we have to go ahead with the independent science, we have to gather all the evidence we possibly can, before any decisions can be made about this land.''

''What we are hoping is that this will give us a breathing space to get research done, but I also believe that there are certain areas like this place that should always be left alone for agriculture. We are not against mining, but it has to be appropriate for the place.''

Of the $200 million in concessions won by Mr Windsor and Mr Oakeshott, $150 million will be used to establish an independent scientific body to provide advice on the impact on water of coal seam gas and other mining projects.

Next year, the states will be asked to sign an agreement with the Commonwealth requiring both parties to heed the advice of this body before approving new projects.

There will be $50 million in incentives for the states to sign up. If they refuse, the government will amend federal environmental law to ensure the impact on water must be factored in before the Commonwealth grants approval.

The government also agreed to protections against states like NSW and Western Australia raising their royalties to gouge the profits of the mining tax.

The mining tax will refund mining companies for state royalty payments and NSW and WA have given notice of increases that would directly attack the mining tax.

Consequently, a review of the GST funding formula now under way will incorporate penalties to discourage states that raise royalties, most likely by stripping away GST revenue.

The Treasurer, Wayne Swan, announced last night that these states will also be docked infrastructure money to be funded from the mining tax to claw back any future royalty increases.

The mining tax will apply to the profits of coal and iron ore miners.

After being lobbied extensively by the smaller miners, Mr Wilkie forced the government to lift the profit threshold at which the tax will apply from $50 million to $75 million and eventually $125 million. This will cost $100 million, or $20 million a year, over the next five years.

This enraged the Greens who feel the miners have already won enough concessions because they forced the government to water down the original resources super profits tax.

The Greens leader, Bob Brown, had warned he would not tolerate any further concessions that gave money back to the miners and said yesterday that Ms Gillard had until Thursday to replace the $100 million or the Greens would block the passage of the bills.

The government was confident of meeting this request.

''Giving a free $20 million back to the mining industry at the expense of education and health isn't something we are going to entertain,'' Senator Brown said.